Standing Committee B

[Mr. John McWilliam in the Chair]

Finance Bill

(Except Clauses 1, 4, 5, 9, 14, 22, 42, 56, 57, 124, 130 to 135, 138, 139, 148 and 184 and Schedules 5, 6, 19 and 25, and any new Clauses and Schedules tabled by Friday 9th May 2003 relating to excise duty on spirits or R&D tax credits for oil exploration.) - Schedule 8 - Stamp duty land tax: charities relief

Amendment made: No. 257, in 
schedule 8, page 179, line 40, at end insert— 
 'Relief under this paragraph is referred to in this Part as ''charities relief''.'.—[Mr. Boateng.]

Paul Boateng: I beg to move amendment No. 287, in
schedule 8, page 180, line 8, leave out 'of persons or a' and insert 'or'.
 The purpose of the amendment is to clarify the types of bodies that can benefit from charities relief. The amendment changes ''body of persons'' to ''body''. It is intended to make it clear that every charitable body can qualify for the relief, even if it is, under the law, a corporation sole. An example of a corporation sole is a vicar or a rector of the Church of England. We want it to be beyond doubt that every corporation sole, if it is established for charitable purposes, is entitled to the relief. There may be some doubt about that at present, although as the hon. Member for Torridge and West Devon (Mr. Burnett) is not in his place, I fear that the doubt will not be explored extensively—perhaps he will join us before the end of the debate. There may be some doubt because, by definition, a corporation sole will always consist of a single individual rather than persons, in the everyday sense of the word. A corporation sole would clearly be a body. I commend the amendment to the Committee.

Mark Prisk: I must say, it was a delightful performance from the Chief Secretary, niftily touching on bodies and souls. It was a treat. The amendment has much to commend it. The performance was not quite as enticing as the one that was given on Friday evening when yet again the Chief Secretary's body was on display to one and all on ''Have I Got News for You''. I do not want to upset people's stomachs at this stage in the day. I am more than happy to say that we do not oppose the amendment.
 Amendment agreed to. 
 Schedule 8, as amended, agreed to.

Clause 69 - Acquisition by bodies established for national purposes

Adam Price: I beg to move amendment No. 119, in
clause 69, page 47, line 40, at end add— 
 '(f) The National Museums and Galleries of Wales.'.

John McWilliam: With this it will be convenient to discuss amendment No. 206, in
clause 69, page 47, line 40, at end add— 
 '(f) Trustees of the National Museums of Scotland; 
 (g) Scottish Natural Heritage; 
 (h) National Galleries of Scotland; 
 (i) Historic Scotland.'.

Adam Price: In tabling these probing amendments, I was seeking to understand the rationale underlying the list of organisations that qualify for stamp duty land tax relief. The title of the clause refers to bodies ''established for national purposes''. As a Welsh nationalist, I am mindful of the fact that there are three nations in the UK, in addition to the Province of Northern Ireland, each of which has its own distinctive purposes. The list of bodies has a somewhat London-centric feel. The Historic Buildings and Monuments Commission for England, which is known as English Heritage, is a specifically English body that has exact equivalents in Scotland and Wales, which are not mentioned.
 As I understand it, the list has its origins in section 507 of the Income and Corporation Taxes Act 1988, which allows the five bodies to claim back income tax as if they were charities. The relief for the British Museum and the Natural History museum is long-standing and goes back to the early 19th century.

George Howarth: I know that the hon. Gentleman would not do this deliberately, but I do not want him to mislead the Committee. English Heritage is not a London-centric body and its representatives in the north-west met me in my constituency office last Friday to talk about its work in the north-west region.

Adam Price: I stand admonished by the hon. Gentleman. I was specifically referring to the British Museum and the National History museum, both of which are London-centric in a narrow geographic sense. English Heritage obviously covers the whole of England, and its equivalent bodies—Historic Scotland, Cadw: Welsh Historic Monuments—perform the same function of conserving and preserving historic monuments and castles in Wales and Scotland. I am glad that he clarified that point.
 The National Heritage Memorial Fund and the Historic Buildings and Monuments Commission for England were respectively established in 1980 and 1983, when specific provision was made for their tax relief. The National Endowment for Science, Technology and the Arts was established under the National Lottery etc. Act 1993, and again provision was made for it to enjoy tax relief. 
 The probing amendments list equivalent organisations in Wales and Scotland, although one 
 could have extended the list to include bodies in Northern Ireland—for example, the board of trustees of the Ulster museum. National Museums and Galleries of Wales is a registered charity and Scottish Natural Heritage is a recognised charity, and they would both be covered by the clause. The position of National Galleries of Scotland, National Museums of Scotland and similar organisations such as the National Library of Wales and the National Library of Scotland, which have talked about satellite sites in the past and could be involved in land transactions, is unclear, and I have been unable to ascertain their charitable status. 
 The potential unfairness is clearest in the tax treatment of bodies equivalent to the Historic Buildings and Monuments Commission for England, such as Historic Scotland and Cadw: Welsh Historic Monuments. Unlike in England, those bodies are Executive agencies of the devolved Administrations and as such would be exempt from stamp duty involving transfers from other public bodies under clause 66. By definition, many of the acquisitions made by those two organisations would be from private individuals, in which case the English body—the Historic Buildings and Monuments Commission for England—would enjoy a tax advantage not offered to the equivalent organisations in Wales and Scotland charged with the conservation of heritage. 
 About 20 castles, including Leeds castle, Shrewsbury castle and Bolton castle, are in private ownership. If the Historic Buildings and Monuments Commission for England were to acquire those castles, it would enjoy tax relief under clause 67. However, Braemar castle and Inverkip castle, Ayrshire—

George Osborne: The Castle of Mey.

Adam Price: The Castle of Mey is an interesting case. Since 1996 it has been owned by a charitable foundation, which would count as a private person in the law. The tax exemption would not apply to Historic Scotland acquiring the Castle of May. Carreg Cennen castle in my constituency was famously sold in the 1930s by the Earl of Cawdor to cover a gambling debt. He forgot that the castle, which is currently privately owned, was within the plot of land that he was selling. If Cadw: Welsh Historic Monuments wanted to acquire it—this would apply to Cardiff castle, Caldicott castle, Gwynedd castle and any other privately owned castles in Wales—tax duty relief would not apply. I cannot imagine that the Government would want to appear to be putting a greater intrinsic value on the historic heritage of England than that of Scotland or Wales.
 I stress that these are probing amendments, but I would be grateful if the Chief Secretary would confirm that the same tax relief will apply for acquisitions from private individuals by organisations in Wales and Scotland that are the equivalent of the Historic Buildings and Monuments Commission for England.

Paul Boateng: Under section 507 of the Income and Corporation Taxes Act 1988, a shortlist of five well-known bodies is entitled to the same reliefs from tax as
 charities. Clause 69 makes those bodies exempt from stamp duty land tax. Generally, they were established for purposes that are in the national interest, but they cannot as a matter of law be recognised as charities because they are only semi-independent of central Government. I stress that that is why they are dealt with in a specific way for income tax and why clause 69 does the same thing for stamp duty.
 The bodies are not on the list because they are in any way especially worthy or more important than bodies that have been omitted. Many more bodies could be added to the list, as is reflected in the amendments, but the five bodies need a specific rule because as a matter of law they are separate corporate bodies that are not able to attain charitable status. Most other contenders for the list, including some of those proposed in the amendments, do not need to go on the list because they are charities or have charities associated with them. 
 For example, the hon. Member for Tatton (Mr. Osborne) mentioned the castle of May. I thought that his comment would be the precursor to his sharing with us the names of palatial homes in the vales of Tatton. We heard so much in an earlier sitting about the arrangements for the acquisition of one such home that I had hoped we might hear more.

George Osborne: I take particular interest in the subject, as one of only two Members of Parliament whose constituency is named after a historic building—the hon. Member for Brighton, Pavilion (Mr. Lepper) being the other.

Paul Boateng: That is very interesting—yet another reason to go to Tatton. When the Committee adjourns, having served the public so selflessly on the Finance Bill, it really ought to pay a visit to Tatton to see not only the hon. Gentleman's palatial residence but the historic building.

George Howarth: I recommend that my right hon. Friend visit Tatton—it is a delightful place—but the hon. Member for Tatton might care to reflect on the fact that the name Knowsley derives from the home of the earls of Derby, which is in my constituency.

Paul Boateng: Tatton via Knowsley, or Knowsley via Tatton—I cannot think of a happier prospect. Either way, the journey will be extremely pleasant.

George Howarth: Of course, my right hon. Friend would be more than welcome in Knowsley. He would be warmly received there.

Paul Boateng: I am quite sure that I would.

George Howarth: The capital of culture.

Paul Boateng: The capital of culture indeed.

George Osborne: The right hon. Gentleman is a cultural icon.

Paul Boateng: Don't go there.
 The activities of the five bodies listed in the clause are as much of public benefit as the activities of bodies that are able to attain charitable status; hence, a special rule in the 1988 Act. The clause puts stamp duty land tax on an equal footing with the other taxes for those bodies, and I commend it to the Committee. 
 The amendments are well-meaning—and the bodies to which they refer are very worthy—but I hope that the hon. Member for East Carmarthen and Dinefwr (Adam Price) will be satisfied by my explanation as to why they are not necessary. As I explained, the list in clause 69 is based on the list in section 507 of the 1988 Act. 
 The National Museums and Galleries of Wales is a working name adopted by the body incorporated as the National Museum for Wales. As the hon. Gentleman is no doubt aware, that body operates a number of museums in Wales, not just the national museum and gallery in Cardiff. The National Museum for Wales is a corporate body, established by royal charter in 1907, with a renewed charter adopted from the 1907 charter in 1991. The amendment would be effective only if it referred to the National Museum of Wales, rather than the National Museums and Galleries of Wales, since that latter is a working name rather than a legal one. 
 I can confirm, however—I am sure that this will satisfy the hon. Gentleman—that the museum is treated as being established for charitable purposes by the Revenue, so it falls within the current stamp duty exemption. That is confirmed by the museum's most recent annual report for 2001–02 in section 1.11, and has also been confirmed to me by the Inland Revenue. The museum is also regulated by the charity commissioners as charity No. 525774. 
 Assuming that the activities of the museum do not radically change in the near future, and I cannot believe that they would, there is no reason why the museum should not fall within the relief in clause 68 following the enactment of the stamp duty land tax. I hope that that sets the hon. Gentleman's mind at rest. Amendment No. 119 would be superfluous. 
 The Inland Revenue has also advised me that, in practice, Scottish Natural Heritage is already treated as being established for charitable purposes, and it therefore falls within the current stamp duty exemption. Once again, there is no reason to suppose that that will not continue under the modernised regime. Historic Scotland is an agency of the Scottish Executive and should therefore be covered by the relief in clause 107(2), to which the hon. Member for East Carmarthen and Dinefwr referred. 
 The other two bodies listed in the amendment are not charities, but have charities associated with them. Amendment No. 206 is therefore also superfluous, and I hope that, having had an interesting debate prompted by the amendment, the hon. Gentleman will feel able to withdraw it.

John McWilliam: I have no interest in any of those bodies now, but I used to be the trustee of the Toure collection housed in the national gallery of Scotland, so I used to have an interest.

Adam Price: With the confirmation that the Chief Secretary has generously provided, I am happy to beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 69 ordered to stand part of the Bill. 
 Clause 70 ordered to stand part of the Bill.

Schedule 9 - Stamp duty land tax: right to buy, shared ownership leases etc

Adam Price: I beg to move amendment No. 281, in
schedule 9, page 181, line 21, at end insert— 
 '(j) the National Assembly for Wales.'.

John McWilliam: With this it will be convenient to discuss amendment No. 280, in
clause 71, page 48, line 30, at end insert— 
 '(j) the National Assembly for Wales.'.

Adam Price: This amendment would add the National Assembly for Wales to the list of bodies in clause 71. The other amendment would do the same thing in schedule 9. The list of public bodies includes central Government, local government, Scottish Ministries and the Executive agencies. Scottish Homes is included in schedule 9, as are the Northern Ireland Departments and the Northern Ireland Housing Executive. The only level of Government to be omitted is the National Assembly for Wales. The reasons for that are unclear.
 It is true that the Executive of the National Assembly for Wales are not currently a public sector landlord. The National Assembly as a legislature is not a public sector landlord either, so the provisions do not seem directly relevant. However, housing policy is a wholly devolved matter and while it is not currently policy in Wales for the Welsh Assembly to be involved in the direct provision of housing, the policy may change. There may be a change of hue in the Government of the National Assembly for Wales at some point in the not-too-distant future. The National Assembly for Wales could, therefore, under the terms of the devolution settlement, choose to become a public sector landlord by setting up an equivalent organisation to Scottish Homes, as it was, or the Northern Ireland Housing Executive to provide affordable housing in designated areas. Indeed, such are the financial difficulties that many local authorities in Wales face in maintaining their housing stock that Gareth Hughes, the former chief executive of Tai Cymru, Housing for Wales, the former executive agency with responsibility for housing, has suggested transferring the housing stock to Assembly ownership via a national housing corporation. If the National Assembly for Wales is not included in the clause, then stock transfer, or right-to-buy schemes in the case of Assembly-owned housing, would be at a tax disadvantage. The Development Board for Rural Wales was a public sector landlord prior to its incorporation in the Welsh Development Agency, so there are precedents. 
 I respectfully ask the Government, in the spirit of devolution, to include in the clause their esteemed colleagues in the National Assembly. I should point out that Scottish Homes, which is mentioned in clause 129, no longer exists. It was wound up in 2001 and has been superseded by a new body, Communities Scotland. That reference will therefore need to be changed on Report. I am developing a bit of a reputation for this kind of thing.

Paul Boateng: I am grateful to the hon. Gentleman for pointing out that that organisation is now defunct and that we need to amend the reference for Report. That will certainly be done.
 Clause 71 provides an exemption from stamp duty land tax for a range of transactions where the purchaser is a registered social landlord. Amendments Nos. 280 and 281 would add the National Assembly for Wales to the list of prescribed qualifying bodies that may be the vendor in a transaction and the list of relevant public sector bodies that may arrange right-to-buy transactions under paragraph 1. 
 Paragraph 1 reflects the current stamp duty provisions by granting relief from stamp duty land tax for the transfer of property to a registered social landlord. It sets out a list of qualifying bodies that may be the vendor in such transactions, including various social housing providers such as other registered social landlords and local councils. The amendment would add the National Assembly of Wales to that list of qualifying bodies. However, we have consulted the Assembly's housing directorate, which has informed us that the amendment is not necessary, and I am not minded to go behind its judgment. In the spirit of devolution, it would not be appropriate for me to do so. I am unlikely, I fear, to succumb to the hon. Gentleman's temptations, particularly—I hesitate to draw this to his attention, but feel bound to do so—as one must reflect on the Welsh electorate's verdict at the last Assembly elections. 
 Amendment No. 281 relates to the same principle. I understand where the hon. Gentleman is coming from, but I cannot accept his argument. We are asked to add the National Assembly of Wales to the list of various social housing providers, such as registered social landlords and local councils. However, the National Assembly does not own any properties that could be disposed of under the right to buy, nor has it drawn to our attention any intention on its part to become a social landlord. An amendment of this nature would therefore be unnecessary. While thanking the hon. Gentleman for this interesting, though mercifully short, debate, I urge the Committee to reject the amendments.

Adam Price: I am very disappointed that the spirit of generosity from the Chief Secretary that prevailed this morning has not extended beyond lunch. The key point is that the principle underlying the devolution settlement is very much an enabling one. I fully accept that the Welsh Assembly Government—the Executive arm of the National Assembly for Wales—are neither a public sector landlord currently nor have the explicit objective in their housing strategy to become one. However, it is possible under the devolution settlement that a Government of a different political complexion could decide to have an alternative policy including the direct provision of public housing in certain designated areas through a national housing corporation. It would seem wrong for a Finance Bill in this place to bind the hands of the National Assembly for Wales over its housing policy. Under the Government of Wales Act 1998, it has been recognised that that should be a decision for the elected Members.
 I stress that that is for elected Members, not officials of the department of the National Assembly for Wales that deals with housing. It is a matter for the elected Members of that legislature to decide at some future date, and it would seem entirely wrong simply to omit the National Assembly for Wales from the schedule, and, therefore, to decide through this Finance Bill what the housing policy of some future Administration of the National Assembly should be. I am quite used to being in a minority of one, and I will press the amendment to a vote unless the Chief Secretary is about to tell me that he will think again and perhaps consult his colleague the Minister for Local Government and Housing in the Welsh Assembly Government, rather than a lowly housing official.

Paul Boateng: There is a tradition in this Committee and this House that one does not deprecate dedicated public servants. To describe the official who was good enough to speak to my civil servants as a lowly housing official is a bit cheeky, if I may say so. The hon. Gentleman may wish to reflect on that and perhaps withdraw his comment.
 I seek to set the hon. Gentleman's mind at rest. If it came to pass that the National Assembly went into the business of being a social landlord or leasing properties, it would always be open to the Ministers concerned and/or the Secretary of State to press their case, in which case we could use regulations to add to the list in paragraph 1 of schedule 9. There is no need for the amendment and, on reflection, the hon. Gentleman might not want to press it to a vote. He has all that he needs. If that situation came to pass, it would be open to the Government through the exercise of the regulatory power, to add the National Assembly to the list in paragraph 1 of schedule 9. For that reason, the amendment is simply unnecessary, but it is a matter for him to decide.

Adam Price: I am suitably admonished by the Chief Secretary. Certainly, nothing that I said was intended to deprecate the important function of the civil service in Wales. I was seeking to deprecate the Chief Secretary's proposal to omit the National Assembly for Wales. Why strive to retain the omission when the import in terms of revenue to the Treasury would be fairly minimal, given that we are talking about a hypothetical situation at this stage? The principle is very important. Under the enabling spirit enshrined in the Government of Wales Act 1998, the National Assembly for Wales should decide what its approach to housing policy should be. As I am a member of the Welsh National party, I am afraid that I shall have to press the amendment to a vote.
 Question put, That the amendment be made:—
The Committee divided: Ayes 2, Noes 15.

Question accordingly negatived.

David Wilshire: On a point of order, Mr. McWilliam, I understood that there was an error in the schedule because the Chief Secretary admitted that a defunct organisation was included. Is it sensible to allow a schedule to stand part of the Bill when it contains an error? Would it not be better for the Chief Secretary to admit his mistake, withdraw the schedule and return with it properly drafted? I am not comfortable about approving something that the Government admit contains an error.

John McWilliam: We dealt with that matter on clause stand part this morning.
 Schedule 9 agreed to. 
 Clause 71 ordered to stand part of the Bill.

Clause 72 - Alternative property finance: land sold to financial institution and leased to individual

Question proposed, That the clause stand part of the Bill.

Mark Prisk: We welcome the overdue recognition in the Budget and the Bill of the distinct position of those of the Islamic faith who need mortgages, and we are happy to support the Government in their aim. Having abolished subsale relief earlier, they are now having to target relief. Will the Chief Secretary confirm that the arrangements are applicable to the non-residential market as well, because they are particularly important for small businesses?

Paul Boateng: Stamp duty land tax allows for fairer tax treatment of property purchases by individuals financed by certain types of alternative mortgage products. Purchasing a property with an Islamic mortgage currently results in a higher stamp duty charge than when using a conventional mortgage. The modernised regime removes that anomaly, putting the stamp duty treatment of purchases financed in that way on a level footing with purchases financed by conventional mortgage products. The benefits are not restricted to the Islamic community, because the Government believe that many other consumers may benefit from increased choice in the mortgage market. The reliefs do not exclude all commercial transactions. Transactions made by individuals or a group of individuals, including partnerships when all the partners are individuals, can make use of the reliefs, and whether the property being purchased is residential or commercial is not a factor in the availability of those reliefs.
 Question put and agreed to. 
 Clause 72 ordered to stand part of the Bill. 
 Clauses 73 and 74 ordered to stand part of the Bill.

Clause 75 - Crofting community right to buy

Question proposed, That the clause stand part of the Bill.

Ann McKechin: I should like to raise a matter that I have already raised with my right hon. Friend. The exemption under the Land Reform (Scotland) Act 2003 is very welcome. The Scottish Parliament has carried out a widespread programme of land law reform in Scotland and, as a property lawyer in Scotland, 2001 was a good year for me to change career because I would have required comprehensive re-education in many areas of law.
 The exemption covers crofting communities who exercise their right under the Land Reform (Scotland) Act 2003 to purchase their land from the owner in certain circumstances. Given the value of the land concerned, that is an important exemption because the value is likely to be in the highest band. Why has the exemption not been extended to include purchases under part 2 of the Land Reform (Scotland) Act 2003, which confers a similar right on bodies representing rural communities to buy land with which the community has a connection? The right is different in that an interest must be registered, and the right to buy is exercised when the land is marketed or sold by the proprietor. That is likely to involve people with little finance who must raise it from the public sector or charity and funds are difficult to obtain. The additional burden of stamp duty, usually at the highest rate of 4 per cent., on top of the purchase price, could act as a barrier to communities that want to exercise their right to buy land in those circumstances. 
 There seems little reason why a distinction should be made between crofting and rural communities when it is clear that the intention of the legal reform is to allow communities the right to purchase property and to develop it as they see fit. They are the people who occupy the land and use it, and I hope that on Report my right hon. Friend will consider extending the valuable exemption to transactions covered under part 2 of the Land Reform (Scotland) Act 2003.

Paul Boateng: I am grateful to my hon. Friend the Member for Glasgow, Maryhill (Ann McKechin) for her interest in this and other clauses with a Scottish dimension, and for the expertise and care with which she has addressed the issues. I have given careful consideration to what she said and to the representations made by the Law Society of Scotland.
 The purpose of the clause is to remove an anomaly in the application of stamp duty land tax charges that could act as a barrier to the use of the crofting community's right to buy. It is a group right, and similar problems occur—as described when we discussed the previous clause—with the right to enfranchise, because there is only one transaction on behalf of a number of individuals. That means that the total consideration is likely to be high and may attract a stamp duty charge at the higher rates. That in turn means that people can be put off exercising their right. 
 The clause seeks to address the problem by determining the rate at which to charge stamp duty land tax on a lower calculated value than the actual consideration. In many cases, that will reduce the amount of stamp duty due and bring it more in line with the stamp duty that would have been due had each share in the transaction been bought separately. 
 That should make the crofting community right to buy more attractive. 
 I was asked why we have not introduced relief for the Scottish community right to buy. The matter was raised in advance of my hon. Friend's contribution in correspondence from the Law Society of Scotland. I should make it clear that the relief for the crofting community right to buy was introduced with the specific purpose of removing that barrier for crofters who wish to buy their crofts under the terms of that right. The type of purchases made under the community right to buy do not encounter the same problems, and similar relief to that provided in the Bill for the crofting community right to buy would not be appropriate. 
 I am aware that some—the Law Society of Scotland is among them—have an interest in extending the clause to the community right to buy, but such an extension would not be appropriate. It is important to recognise and to respect the distinction between the community right to buy and the crofting community right to buy. Under the crofting community right to buy, a crofter purchases their croft in conjunction with other crofters and buys a number of separate pieces of land in one large transaction. As I have indicated, in many cases the transaction will be charged at a higher rate, from which many disadvantages flow. 
 The community right to buy is different: community bodies can register an interest in a piece of land and when it is available for sale have the right to purchase it. The right is mostly used to purchase one piece of land rather than separate pieces of land, which is the particular characteristic of the crofting community right to buy, and the same problem does not therefore occur. The stamp duty land tax charge on community right-to-buy purchases is fair and appropriate. It will not be unduly burdensome because of the numbers of pieces of land acquired. The same relief should not therefore be available. 
 With that explanation, I hope that my hon. Friend will feel that the issue has been considered, that we have taken into account the particular circumstances in relation to both the community right to buy and the crofting community right to buy, and that we have reached a just and equitable result. 
 Question put and agreed to. 
 Clause 75 ordered to stand part of the Bill.

Clause 76 - Duty to deliver land transaction return

Question proposed, That the clause stand part of the Bill.

Mark Prisk: The clause begins the administration of the new land tax and is therefore an important matter on which we should spend a moment or two. It establishes the duty to deliver land transaction returns. It states:
''In the case of every notifiable transaction the purchaser must deliver a . . . land transaction return''.
 The land transaction return, including the self-assessment of liability and the payment of stamp duty land tax, must be delivered to the Revenue 
''before the end of the period of 30 days after the effective date of the transaction.''
 Subsection (3)—the explanatory notes erroneously refer to subsection (1)—provides that the return must include a self-assessment of liability and 
''be accompanied by payment of the amount chargeable.''
 Many professional bodies and leading chartered accountants have asked why the payment cannot be made within the same time limit. Why must the payment accompany the return? Taxpayers may want agents to file their returns while paying their tax themselves or they may want to file their returns manually while paying their tax electronically. We have heard a great deal about e-business and e-conveyancing, but their importance has been ignored. The logic of the clause is that the tax will always be payable, but that is clearly incorrect because in some cases a return must be filed in order to claim a relief. Again, the Bill appears to contain a mistake. 
 There are other concerns. Many leading professionals feel that the 30-day period is too short to complete the form and to pay up, a combination to which I referred earlier. The earlier proposal put out to consultation offered a quarterly return and a payment cycle as an option for business. It was perfectly fair and matched modern commercial practice, but it seems to have vanished. When did the time limit change to 30 days and why did that happen? Does the Chief Secretary accept that professional bodies and leading practitioners, including the Institute of Chartered Accountants in England and Wales, the Chartered Institute of Taxation, KPMG and PricewaterhouseCoopers, have said that the deadline should be reconsidered for the majority of taxpayers? Conservative Members would appreciate it if the Chief Secretary recognised those points and acknowledged them in his remarks.

George Osborne: I rise for the same reason as my hon. Friend. The clause is the first of a series of clauses that highlight the fiction that stamp duty land tax is connected with the old stamp duty. The compliance system under the old stamp duty was based on documents being sent to the Inland Revenue, where they were stamped. Payment was made once they had been checked and the stamp had been applied. Clause 76 and subsequent clauses contain a whole new method of collecting duty, which is the same collection method used for other taxation because it applies to the transaction rather than to the document. The explanatory notes ominously state that the clause allows stamp duty land tax to use established procedures familiar to many tax practitioners and to the Inland Revenue. It is worth bringing to the Committee's attention the fact that all connections with stamp duty, which exists in name alone because it has nothing to do with duties on stamps, are being severed.

John Baron: I support the comments made by my hon. Friend the Member for
 Hertford and Stortford (Mr. Prisk) on subsection (3)(b), which lacks flexibility. I should be interested in the Chief Secretary's view on why the Government insist that the return must be accompanied by payment of the amount chargeable. Why can the payment not be made within the same time limit? Small businesses in particular have told me that the requirement will affect them. They would appreciate as much flexibility as possible.
 I particularly stress a point that has already been mentioned: a taxpayer may want an agent to file their return but want to pay their own tax, which is becoming increasingly common. I ask the Chief Secretary to address that point directly.

Paul Boateng: This is the first clause dealing with the new administrative scheme and enhanced compliance powers. The modernisation of compliance powers is the cornerstone of the modernisation of stamp duty—I stressed the word ''modernisation'' for the benefit of the hon. Member for Tatton. We are bringing up to date antiquated compliance powers that have lingered on well past their sell-by dates. I shall address his charge in more detail in a moment.
 The current stamp duty laws do not contain a recognisable compliance system. I shall give some examples of the problem, which I thought that all hon. Members would recognise. There is currently no obligation to submit documents for stamping, and the Inland Revenue has no powers to force taxpayers to do so. The tax is therefore often referred to as being voluntarily, which was a point made in Committee last week. There is no power to assess under-stated duty. Once a document has been stamped, that is the end, no matter what new information comes to light. The hon. Member for Hertford and Stortford cannot seriously be suggesting that that is right. No person is explicitly liable to pay the tax, so if the Inland Revenue had the power to assess, it would have no one to chase for the tax. 
 Those weaknesses have been known since 1983, but the hon. Member for Tatton suggests that the legislation is the sinister sign of a novel new tax—in 1983, he was probably the chubby-cheeked terror of the first remove. Nevertheless, even in 1983 the then Conservative Government—no doubt he was a juvenile supporter of the Conservative party even at that early age; he has that precocious feel about him—recognised that something was wrong. The hon. Gentleman's predecessors who had responsibility for such matters asked Lord Keith of Kinkel, a well known and respected law lord who, sadly, is now deceased, to look into the matter to see how the enforcement powers of the Revenue in that respect could be improved. The report made a number of clear recommendations regarding stamp duty among which were obligations to bring documents to stamp, improve information powers, modernise appeal procedures and improve penalties. It took a new Labour Government in 2003—some 20 years later—to introduce all those things. There was an intervening period under Conservative Administrations in which absolutely nothing—zilch—was done.

Mark Prisk: This is a charming and doubtless fascinating walk down memory lane, but none of the
 items that the Chief Secretary has mentioned relate to anything referred to by those on the Conservative Benches. Our concerns relate to why the payment has to accompany the return, the 30-day deadline and the other matters that my colleagues have raised. Why give us the history lesson? Just give us the facts.

Paul Boateng: I gave a history lesson because I was provoked into it by the hon. Member for Tatton, who insists that we are talking about a novel and sinister new Labour innovation. We are talking about no such thing.

George Osborne: Will the Chief Secretary give way?

John McWilliam: Order. Can we calm down a bit? We are going a bit wide. We are discussing the duty to deliver a land transaction return and only that.

George Osborne: Thank you, Mr. McWilliam. I am happy to have an exchange on our views and opinions in 1983. My opinions were more consistent than the Chief Secretary's.
 The clause reveals that the name of the tax is a fiction because it has nothing to do with duties or stamps. Why does the Chief Secretary not admit that fact, say that it is a wholly new tax with a wholly new collection mechanism and be done with it?

Paul Boateng: I make no such admission.
 I regard myself as having been drawn back to the detail of the clause, Mr. McWilliam—[Hon. Members: ''Ah!''] No, I am only too happy to do so. 
 Let us consider some of the points that have been made. I was asked, ''Why 30 days? What happened to the idea of quarterly returns?'' Quarterly returns were first floated as an idea in the consultation document for large groups. In fact, the idea did not much interest those consulted, because they habitually used different legal advisers for each deal and did not see any great benefit in it, so we did not pursue it. That is what consultation is all about. We are accused of not listening. We did listen, and we did not pursue the idea as a result of what we were told. The 30-day limit runs from the completion of the purchase, and, in the great majority of cases, all the money has changed hands by then. There is no justification for a longer time limit. It would cause delay and be costly to the Exchequer. 
 I was asked, ''Why does the payment have to accompany the form?'' At present, payment is made to the Revenue with the documents for stamping. Requiring the payment to accompany the return continues that practice. Again, there is nothing novel about that. There is no great innovation. It is just common sense. We want to issue the certificate quickly, but if payment is not made with the return, we would have to delay issue until it is made. 
 For all those reasons, I have no hesitation in commending the clause to the Committee. I hope that it will be given a good wind, because it certainly needs it, not least because the SDLT return will now be made on a form that will be processed centrally. If the return is properly completed and payment is made, the certificate will be issued. Certificates will be rapidly returned to solicitors, thereby allowing title to be transferred in good time. At present, documents must be checked at the time of stamping—that will no 
 longer be necessary—and the Inland Revenue can make inquiries afterwards. [Interruption.] It is called modernisation, or speeding up the process. Opposition Members ought to welcome it. 
 In the future, the facility will exist to transfer land electronically. In those cases, it will be possible to shorten yet more the time within which the return is made. All that should be welcome, and I hope that Opposition Members will see the sense of it and not pursue unnecessary and futile objections. 
 Question put and agreed to. 
 Clause 76 ordered to stand part of the Bill. 
 Clauses 77 and 78 ordered to stand part of the Bill.

Schedule 10 - Stamp duty land tax: returns, enquiries, assessments and appeals

Amendments made: No. 258, in 
schedule 10, page 189, line 5, after 'so' insert '(''notice of enquiry'')'.
 No. 259, in 
schedule 10, page 193, line 28, leave out 
 'determine to the best of their information and belief' 
 and insert 
 'make a determination (a ''Revenue determination'') to the best of their information and belief of'.
 No. 260, in 
schedule 10, page 193, line 33, leave out 'determination under this paragraph' and insert 'Revenue determination'.
 No. 261, in 
schedule 10, page 193, line 36, leave out 'determination under paragraph 25' and insert 'Revenue determination'.
 No. 262, in 
schedule 10, page 194, line 6, leave out 
 'determination has been made under paragraph 25' 
 and insert 
 'Revenue determination has been made'.
 No. 263, in 
schedule 10, page 194, line 16, leave out 'determination under paragraph 25' and insert 'Revenue determination'.—[Mr. Boateng.]
 Schedule 10, as amended, agreed to. 
 Clause 79 ordered to stand part of the Bill.

Schedule 11 - Stamp duty land tax: self-certificates

Amendment made: No. 264, in 
schedule 11, page 202, line 35, after 'so', insert '(''notice of enquiry'')'.—[Mr. Boateng.]
 Schedule 11, as amended, agreed to. 
 Clauses 80 to 89 ordered to stand part of the Bill.

Clause 90 - Application to defer payment in case of contingent or uncertain consideration

Mark Prisk: I beg to move amendment No. 193, in
clause 90, page 58, line 26, leave out '18 months' and insert '6 months'.
 I feel almost giddy after racing through all those clauses. It seemed that someone had pushed the fast button on the escalator and we suddenly began to hurtle along.

John McWilliam: Only me.

Mark Prisk: And very pleasant it was to move forward so quickly.
 Amendment No. 193 relates to clause 90, which provides that a purchaser may make an application for stamp duty land tax to be deferred. The application may be made if the whole or part of the consideration for a transaction is contingent or uncertain and if some or all of the consideration 
''falls, or may fall, more than 18 months after the effective date of the transaction.''
 The purpose of this probing amendment is to replace ''18 months'' with ''6 months''. It follows from legal representations that I hope the Chief Secretary will bear in mind. In particular, I am grateful to the Law Society for its advice and support. The Law Society and several leading practices argue that, given the fact that stamp duty land tax is due 30 days after the transaction, it is unreasonable that an application to defer payment of stamp duty land tax can be made only where part of the consideration falls or may fall more than 18 months after the effective date. The period of 18 months should, on the basis of fairness and modern commercial practice, be reduced to six months. I commend that proposal to the Chief Secretary and hope that we will have a positive reply.

Paul Boateng: The amendment would reduce the time limit in clause 90 from 18 months to six months. It would allow a purchaser to make an application for stamp duty land tax to be deferred under clause 90 if some or all of the consideration fell more than six months after the effective date of the transaction. It would alter the circumstances in which an application for deferred payment could made by reducing the time limit in subsection 1(b). If the amendment were accepted, it would mean that, if the other conditions were met, an application for deferred payment could be made when some or all of the consideration fell more than six months after the transaction.
 The amendment is in line with several representations that have been made on the clause. Having considered their detail carefully, we have accepted that the existing 18-month time limit may be unduly restrictive. We are therefore content with the amendment. I commend it to the Committee. 
 Turning to clause 90 itself, it provides that in certain circumstances a purchaser may make an application for SDLT to be deferred.

John McWilliam: Order. If the Minister wants to deal with clause stand part at the same time, I am perfectly content. I am saying that so that other hon. Members know what we are doing.

Paul Boateng: I am grateful, Mr. McWilliam.
 Payment of consideration in that way is not uncommon in complex developments. The clause will help purchasers who meet the criteria to plan for their payments of tax in those circumstances. The clause includes a regulatory power, under which regulations will be made to set out the detailed requirements for an application, to provide an administrative framework. There will be an opportunity for consultation on the regulations before they are laid, so that the Government can ensure that the administrative provision works effectively and practically for those who wish to make an application. Clause 90 allows taxpayers to defer SDLT payments in certain prescribed circumstances. I commend the clause, with the amendment, to the Committee.

Mark Prisk: I am delighted that the Chief Secretary has considered the amendment, listened to outside concerns, and accepted it. I welcome that.
 Amendment agreed to. 
 Clause 90, as amended, ordered to stand part of the Bill. 
 Clause 91 ordered to stand part of the Bill. 
 Schedule 12 agreed to. 
 Clause 92 ordered to stand part of the Bill.

Clause 93 - Information powers

Question proposed, That the clause stand part of the Bill.

Mark Prisk: At this point, there is much flurry of paper as one ensures that one does not miss key things.
 I am sure that we shall consider schedule 13 later, although it is related to clause 93. I should like to raise one or two points relating specifically to the clause, although I may make the odd reference to schedule 13.

John McWilliam: Order. The hon. Gentleman is aware that there are amendments to schedule 13.

Mark Prisk: Indeed, Mr. McWilliam.
 The clause introduces schedule 13, which provides a wide range of information powers. The clause deals with information powers additional to the power to issue a notice for documents and for the purposes of an inquiry in paragraph 15 of schedule 10. As I understand it, looking back through tax law, this measure is based on sections 20 to 20D of the Taxes Management Act 1970. The powers in the Bill are more general and apply not only to persons under inquiry but to third parties. Will the Chief Secretary confirm that this schedule contains no alteration to the scope of the powers of tax officials and the board, compared with the similar powers in established legislation? 
 If there is an inquiry such as would require a notice under sections 20 to 20D of the Taxes Management Act 1970 for income, corporation or capital gains tax, it would be possible, by adopting these powers, also to seek information on any stamp duty land tax aspects. I understand that there is an efficiency gain if the same officers deal with important inquiries. 
 A number of organisations, including the Institute of Chartered Accountants in England and Wales, have suggested possible ways in which the schedule might be tightened and improved, and in particular paragraph 1(3). Although I am referring to the schedule, I shall restrict my remarks to the clause. Will the Chief Secretary confirm that the powers are established and stick to the existing law? Is he confident that taxpayers—notably small businesses that are leasing their first shop or perhaps a first-time home buyer—will understand the full scope of the Revenue's powers and their obligations? 
 Despite what the Chief Secretary may say, this is a significant shift from a stamp duty to a land tax. Putting aside all the names and the fun that we have had about what things should or should not be called, taxpayers face the prospect of having to operate in an entirely different regime. Will the Chief Secretary make it clear that the Government intend to ensure that those who are paying the new tax, as opposed to the old duty, will understand that? That is fairly crucial, because all the talk about information, compliance, administration and enforcement comes to nothing if the taxpayers involved do not understand the significance of the change from the duty to the new tax.

Paul Boateng: The clause and the schedule reproduce for stamp duty land tax Inland Revenue information powers contained in sections 20 to 20D of the Taxes Management Act 1970. Current stamp duty provides no similar information powers to the Inland Revenue. It can ask about documents before it stamps them and can call for evidence if a taxpayer requests an adjudication of the amount of the duty, but there is no sanction if the information is not provided, except to refuse to stamp the documents. That cannot be a satisfactory state of affairs. Should the taxpayer decide that he does not want the documents stamped after all, he can simply take them away, and the Inland Revenue is powerless.
 We make no apology for the fact that stamp duty land tax, by contrast, provides modern inquiry powers based on other taxes, incorporating proper appeal rights. The schedule is part of those modern powers and does no more than apply existing legislation for other taxes to stamp duty land tax. The powers in sections 20 to 20D of the 1970 Act are aimed at serious cases of tax avoidance and evasion, and their use is strictly controlled by the Inland Revenue. The extension of the powers to stamp duty land tax will be similarly closely controlled. 
 The clause also provides for civil penalties if the notices issued under the schedule are not complied with. There are similar penalties in the 1970 Act, which will be familiar to many who have served on Committees considering previous Finance Bills. 
 In reproducing the existing powers, the schedule defines legal privilege in paragraphs 35 and 48, which reproduce existing definitions in section 20C(4)(a) and paragraph 5 of schedule 1AA to the Taxes Management Act 1970. 
 The schedule reproduces existing legislation and does not contain any new definition of legal 
 professional privilege. The Government are fully aware of the case of R v. Special Commissioner, on the application of Morgan Grenfell & Co. Ltd, which hon. Members will no doubt be aware of. That case addresses the special commissioner's powers and clarifies existing law by saying that legal professional privilege is a basic human right that can be overruled only by specific wording or necessary implication, neither of which was present in the TMA power being discussed. 
 Following the Morgan Grenfell case, the Inland Revenue accepted that legal professional privilege applies to all its information powers, and the judgment gives clarity. By mirroring the TMA powers in the schedule, that clarity is retained. If different words were used, the clarity that the courts have provided would be lost. That is clearly not something that any of us would wish.

Jonathan Djanogly: As legal privilege is such a long-established, historic legal concept, surely there is no need to define it? To define it could work against the actual concept.

Paul Boateng: We are avoiding the creation of any ambiguity by reproducing the existing definition in section 20C(4A) and paragraph 5 of schedule 1AA of the Taxes Management Act 1970. Those are the definitions referred to in paragraphs 35 and 48 of schedule 13. The schedule reproduces existing legislation for stamp duty land tax and does not contain any new definitions. We should read the definitions subject to their Lordships' ruling on the meaning of those definitions in that case.

George Osborne: I should like to pick up on the point made by my hon. Friend the Member for Huntingdon (Mr. Djanogly). The Law Society has made representations stating that because of the Morgan Grenfell case there is no necessity to define legal privilege. It is long established in common law. The definition provided in the Bill cannot as a matter of law restrict the general meaning of privilege. The Law Society feels that what the Chief Secretary is doing is totally unnecessary, and it may be counter productive.

Paul Boateng: With respect, we take a different view. We cannot be in error if we reproduce the wording that was subject to interpretation by their Lordships in the Morgan Grenfell case. We can only be in a position in which their Lordships interpretation continues to prevail. Were we to omit any definition at all, or insert a different definition, we would expose ourselves to error and ambiguity, which is not something that we intend to do. With that explanation, I hope that the Opposition will accept that their amendments to schedule 13 would lead to an unsatisfactory situation and a divergence between the clause and the TMA. It would put taxpayers in a difficult position if these powers and those in the TMA were applied to the same documents.
 Through the Lord Chancellor's Department, the Government have initiated a consultation following the Office of Fair Trading's report on competition in the professions. Legal professional privilege is one 
 issue in the consultation. A document was issued for consultation in July 2002, and responses were invited up to the 14 May 2003. It would be premature to make any changes to the references to LPP before the responses can be considered and decisions taken on the consultation. If the Government decide that changes in the law are needed, they will be made in the future when they can be made to the Taxes Management Act 1970 and the equivalent stamp duty land tax provision. 
 In response to the perfectly reasonable point made by the hon. Member for Hertford and Stortford about the importance of taxpayers understanding their obligations, we are undertaking an extensive customer education programme, aimed particularly at intermediaries, such as solicitors, conveyancers, other advisors and those active in the industry. I believe that that will go a long way towards meeting his concerns. I can confirm that there are no alterations to the scope of section 20 of the 1970 Act. With those assurances, I hope that the hon. Gentleman will withdraw the amendment.

John McWilliam: Order. The amendments have not even been called yet.

Mark Prisk: I thought I had gone into a time warp in which I had not actually proposed something that the Chief Secretary was asking me to withdraw.

John McWilliam: Order. I think that the Chief Secretary might be unduly sensitive to any reference to ''The Rocky Horror Picture Show''.

Mark Prisk: It is sometimes pleasant to have a prescient Chairman, Mr. McWilliam, but when that Chairman destroys one's potential joke it is not quite so entertaining. I shall certainly not try to recreate the GLC pantomime.

George Osborne: Has the Chief Secretary not just revealed that he will oppose our amendments, whether he listens to the arguments or not? He does not even wait to hear the Opposition's arguments before he makes the counter case. He has shown his hand.

Mark Prisk: Indeed. We now move from prescience to that sense of déjà vu in ''The Matrix'', in which I feel as though something has already happened and I am not sure why. Therefore, let me move these amendments—

John McWilliam: Order. No, no. We are now getting ahead of ourselves. All we are dealing with now is clause 93 stand part. When we dispose of that, I will call amendments Nos. 184 and 185, but we are not there yet.
 Question put and agreed to. 
 Clause 93 ordered to stand part of the Bill.

Schedule 13 - Stamp duty land tax: information powers

Mark Prisk: I beg to move amendment No. 184, in
schedule 13, page 215, line 38, leave out subparagraph (2).

John McWilliam: With this it will be convenient to discuss the following:
 Amendment No. 185, in 
schedule 13, page 219, line 34, leave out subparagraph (2).

Mark Prisk: Amendment No. 184 is a probing amendment and is intended to deal with the question of legal privilege. As members of the Committee will be aware, we have already trodden heavily down that path. As the Chief Secretary has highlighted, much of the issue revolves around the case of Morgan Grenfell and the special commissioners, which again begins to sound like a movie title, but it may be just that we are drawing near the end. I shall proceed as quickly as I can, which I am sure the Chief Secretary will appreciate.
 I am not satisfied with the right hon. Gentleman's explanation. He was unclear why this change was felt to be necessary in the light of that case, and I should be grateful if he would take us through the reasons why the Government were not prepared to take that step.

Jonathan Djanogly: Will my hon. Friend give way?

Mark Prisk: I am about to conclude. Therefore, in view of the time, I shall do so, but my hon. Friend may wish to contribute in his own time.
Mr. Djanogly rose—

John McWilliam: Order. The hon. Gentleman has sat down. Do you wish to speak, Mr. Djanogly?

Jonathan Djanogly: Thank you, Mr. McWilliam. I shall address the amendments briefly.
 Earlier on—it seems a long time ago now—we discussed the clause defining an interest in land, and the Chief Secretary referred to the law of property legislation, following case law, and said that, because of that legislation, there was no need for a definition. However, he now seems to have changed his attitude and, all of a sudden, this legal concept needs defining. There seems to be an inconsistency of approach.

Paul Boateng: I do not think that there is any inconsistency. We are deliberating on two completely different areas. One I do not think needs definition, whereas the other does. This is not ''Alice in Wonderland''. We are clearly proceeding in a way that reflects established law and takes great care not to upset established law.
 Anyone who has had the opportunity to plough through the Morgan Grenfell case, and I know that a number of Opposition Members have—[Interruption.] Sad, that was very sad. Anyone who has done that knows that it will be a brave person who seeks to upset that judgment. We do not seek to upset it. We accept it. The way to ensure that the judgment continues to have application is to reproduce exactly the definition on which it was made. That is why I commend the clause to the Committee and must reject the amendments. The hon. Member for Hertford and Stortford makes the case eloquently, but I must reject his blandishments. I simply do not accept the amendments, for the reasons that I have given at some length.

Mark Prisk: I am not entirely convinced about the points that the Chief Secretary has made, not least because a number of more distinguished legal minds have opposing views to his. Therefore, one listens to
 the view of those outside experts with some concern. However, I suspect from what the Chief Secretary said that the point has been made with him. Given that the purpose of the amendments was to tease out a response to our concern, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Amendments made: No. 265, in 
schedule 13, page 216, line 32, leave out 'officer or the Board' and insert 'Inland Revenue'.
 No. 266, in 
schedule 13, page 216, line 37, leave out 
 'the officer or the Board' 
 and insert 
 'an officer of the Board'.—[Mr. Boateng.]
 Schedule 13, as amended, agreed to.

Clause 94 - Power to inspect premises

Question proposed, That the clause stand part of the Bill.

David Wilshire: I apologise to my hon. Friend the Member for Hertford and Stortford for not briefing him on the contribution I am about to make. He need not worry about what I will do to his well-laid plans. It just seems time that I stretch my legs on a matter that concerns me, even though I am not a tax expert.
 Clause 94 is about the power to inspect premises. I regularly twitch when I see that the powers that be will be given unfettered opportunities to do what could easily amount to raiding someone just because the Board of Inland Revenue or some other authority decides that it is a good idea. Clause 94(1) states that an authorised officer may inspect any property 
''at such reasonable times as the Board may consider necessary.''
 Such phrases always rings alarm bells for me. I am conscious of the fact that there may be circumstances in which giving notice and negotiating a mutually suitable time could give someone the opportunity to destroy documents or do something else that would not be very helpful. However, if the stated purpose for calling at premises is to value them, it is highly unlikely that negotiating a suitable time would give anyone time to remove the premises so that they cannot be valued. There is no risk of something awkward happening if the matter is subject to negotiation. Therefore, I am worried about the power. Raids are not necessary if the purpose is valuation. 
 Clause 94(2) discusses a person who 
''wilfully delays or obstructs an officer''.
 We must rely on the old legal wonder of reasonableness, which is usually an opportunity for lawyers to make money and for vagueness to take over. The word ''wilfully'' seems another opportunity for lawyers to make large amounts of money in defining it. I suspect that the Chief Secretary will draw my attention to clause 97, which states: 
''Where a person had a reasonable excuse for not doing anything required to be done for the purposes of this Part of this Act''.
 All I will say is that ''reasonable'' is again included, giving yet another opportunity to lawyers to make money. 
 I hope that the Chief Secretary will reassure us that he has no intention of letting the Board of Inland Revenue use the clause as a draconian means of saying when it suits them to go and raid a premise, and that he will ensure that it understands that if it wishes to invoke clause 94, it will do so in a sensible way or after negotiation with the people concerned and not in the high-handed manner that is all too often the case.

George Osborne: I thank my hon. Friend for spotting in clause 94 a significant extension of the power of the state. Does he know whether it would actually be Inland Revenue officials or—far more serious—chartered surveyors on behalf of the Inland Revenue who would make lightning raids on people's premises?

David Wilshire: All I can say to my hon. Friend is that clause 94(1) states:
 ''If for the purpose of this Part the Board authorise an officer of theirs''. 
 It does not say— 
 Sitting suspended for a Division in the House. 
 On resuming—

David Wilshire: One of the problems with interruptions is that you sometimes forget what you were talking about.

John McWilliam: Order. The problem is easily solved because I have not forgotten. Nor have I forgotten what was said.

David Wilshire: What I really meant was that I am liable to forget. However, on this occasion I have not. The other danger is that one has the opportunity to think. The longer I think about the clause, the more it begins to concern me. My hon. Friend the Member for Tatton intervened and asked whether we were talking about a dreaded officer of the Inland Revenue or, even worse, a chartered surveyor. I do not know any chartered surveyors, so I cannot join in with the description of them. However, I notice—this is where the thinking comes in—that the clause refers to authorising ''an officer of theirs''. It does not state what sort of officer. Heaven forbid, but it could mean that somebody who does the catering and who knows nothing about valuation, but who is an officer of the Revenue, could be sent round. The Chief Secretary should make it clear that the person sent round will know what he is doing and will be qualified to carry out the valuation.
 Something else occurred to me while I had the opportunity to think, and I mentioned it to our spokesman, my hon. Friend the Member for Hertford and Stortford, who may want to comment on it. Knowing where the Bill comes from, I am not surprised, but I would have hoped that such a Bill would say that the Board can either send round an authorised officer or a qualified person appointed by 
 the Board. The Bill rules out using the private sector, which is usually better and cheaper than options chosen by socialist Governments.

Mark Prisk: It may intrigue my hon. Friend to know that my understanding from all the consultations in which the private sector has participated is that the Government intend to draw it in as part of the process. Does he agree that that makes it all the more peculiar that there seems to be an omission?

David Wilshire: I have stumbled on something significant. Does an officer mean somebody employed from the outside world, or does it just mean an official? I suppose that the only thing that I can take some sort of comfort from is that, whoever the Chief Secretary sends round, the person is unlikely to smash the door down to get in, because that would reduce the value of the property. At least we are saved the jackboot approach.
 Will the Chief Secretary reassure me that inspections will be carried out by negotiation and will not involve doing things that the Board considers suitable for it, rather than the place being valued? There will be no opportunity to hide evidence if notice is given, because the building will always be there to be valued. Will he comment on what is meant by an authorised officer? Does that extend to using people with specialised expertise in the private sector, as well as people employed by the Board?

Paul Boateng: Perhaps it is the time of day or the stage that we have arrived at in our deliberations, but there seems to be an uncharacteristic note of rancour. The hon. Member for Spelthorne (Mr. Wilshire) made a most unseemly attack not only on the acquisition and creation of wealth, which seems strange in the circumstances, but on lawyers and chartered surveyors. Call me old fashioned, but I think that lawyers and chartered surveyors have made quite a good contribution to the deliberations of the Committee, and it does not do the hon. Gentleman any credit to traduce them at this late stage.

David Wilshire: I can easily put the Chief Secretary's mind to rest on that matter, because I invested a huge amount of money in helping my son to become a barrister. That particular lawyer is my pension fund, so I love lawyers.

Paul Boateng: Then the hon. Gentleman ought to be thanking us for measures that we have introduced to the Committee, if they are as he has described them. Of course, I argue that they are not. He really has over-egged the pudding in his assault on this quite innocuous clause.

George Osborne: The Chief Secretary says that the clause is innocuous, but we are talking about the power to inspect people's private premises. Will he clear something up? When the clause refers to an officer of the Board of the Inland Revenue, is that someone directly employed by the Revenue or nominated by it? Will the Revenue employ a load of chartered surveyors directly, or use them? Is he happy to give chartered surveyors employed in the private sector the power to inspect people's premises?

John McWilliam: Order. While we are being nasty to lawyers and chartered surveyors, may I admonish Committee members and say that they must make certain that they are not discussing any lawyer or chartered surveyor who happens to be a member of the Committee?

Paul Boateng: I find that very reassuring, particularly in the light of the fact that I have been accused by the hon. Member for Spelthorne—or was it the hon. Member for Tatton?—of sending people round to the premises of would-be taxpayers so that the Board can make a judgment on the worthiness or otherwise of any claims that they might make. Neither my right hon. Friend the Paymaster General nor I send people—members of the Board or their servants or officers—round to individual taxpayers, as Committee members know. The Board, of course, has its own valuation department and may, if it considers it necessary, send round valuers from that department. I suppose that it is possible—there appears to be nothing in the Bill to preclude it—that the Board may at some time exercise its functions using private surveyors in private practice. Why not? To my certain knowledge, this Government have pioneered the use of the private sector in various aspects of enforcement, particularly in relation to the criminal justice system.

John McWilliam: Order. This is a very narrow clause. Whether people are in private practice or not is not within its scope.

Paul Boateng: I am very grateful for that, Mr. McWilliam, and hope that it has curbed the enthusiasms of the hon. Member for Tatton.

George Osborne: Will the Chief Secretary give way?

Paul Boateng: No, I am going to resist that temptation and go directly to the clause to give an example of why it might be necessary for the Inland Revenue to exercise a power to gain entry to premises so that they can be valued for the purposes of stamp duty land tax, with the permission of the occupier. If the occupier obstructs the Inland Revenue, he commits an offence and will be fined. Stamp duty land tax does not normally depend on valuation as it is normally paid on the consideration for the transaction, whatever the market value. However, valuation can be necessary; part 4 includes some anti-avoidance rules that require a market value. If that is the case, the clause gives the same power to the Inland Revenue to value premises that it already has for capital gains tax, where valuations are needed in many more cases.
 Why might the Inland Revenue need access to buildings or land? If a building were destroyed or knocked down, or fixtures removed or other changes made to its fabric or the site that might be relevant to whether it properly qualified for reliefs or any other matter, it would make sense for there to be earlier access. In a very few cases, it might be necessary for the Revenue to insist on quick or immediate access. What could be more reasonable than that? I do not know why the hon. Member for Spelthorne is getting in such a lather about it and is so twitchy, as he puts it. If my memory serves me well, when he and I served on Finance Bills in the time of a previous Administration, 
 he did not get particularly twitchy when the Board was given the powers that it needed properly to exercise its function. He was a veritable mountain of Botox in the extent to which he remained completely untwitchy and passive. He will therefore excuse me if I take his strictures with a massive amount of salt.

David Wilshire: I appreciate that old age is creeping up and that I am getting senile, but will the Chief Secretary remind me on which Finance Bills I have served? My memory is that this is the first.

Paul Boateng: That is why I posed my suggestion in the way that I did. I apologise if the hon. Gentleman and I have not served together here before. We have known each other for many years and served together on many Committees, and I must admit that I thought that we had done so on Finance Bills. I have certainly served with him in circumstances in which I was as outraged as he is now at the activities of the Government of the day, and he maintained his customary equanimity. That equanimity seems to have broken down on this occasion.
 I shall give way to the hon. Member for Tatton, of whom it can never be said that he displays equanimity in any matter.

George Osborne: I am grateful to the Chief Secretary, I think. I should like to ask him a specific question to which I have still not had a clear answer. Can the powers under clause 94 be conferred on a private surveyor acting on behalf of the Inland Revenue, or can they be conferred only on an officer of the Inland Revenue, employed by it?

Paul Boateng: I welcome that question because I should be concerned if we were giving a power to the Inland Revenue under which, in the exercise of its professional judgment, it could not be free to determine whether or not to use an in-house professional as it saw fit—
 Sitting suspended for a Division in the House. 
 On resuming—

Paul Boateng: We were reflecting on the point made by the hon. Member for Tatton as to whether the valuer concerned, who was sent to the premises under the clause, would have to be an employee of the Board. There is no reason why this provision should not mirror that of the TMA, which permits either an officer of the Board or an appropriate person authorised by the Board to attend. I have asked that some inquiries be made in order to ensure that the clause mirrors that of the TMA. There ought not to be any statutory inhibition on utilising appropriate professional skills, where they are to be found from outwith the direct employment of the Board. I will have those inquiries carried out, and we shall address the matter again on Report, if necessary, to ensure that the two provisions are consistent.
 With those assurances and the example that I have given in mind, I would like to ensure that the concerns—such as they are—that have been expressed by at least one Opposition Member on the 
 operation of the clause in practice can be met. The Board would certainly seek to exercise its powers in a reasonable way and would seek to agree a suitable time with the occupant or the owner. I think that that was the concern expressed by the hon. Member for Spelthorne. I would expect the Board to act reasonably, and in my experience, it does. It is necessary for the Board to have that power for use in appropriate circumstances, and it is a power that has long existed for other taxes. We have no reason to believe that it has caused any problems in the past, and with that in mind I commend the clause to the Committee. 
 Question put and agreed to. 
 Clause 94 ordered to stand part of the Bill. 
 Clause 95 ordered to stand part of the Bill.

Clause 96 - Penalty for assisting in preparation of incorrect return etc

Question proposed, That the clause stand part of the Bill.

John Baron: I have a quick question for the Chief Secretary on which I would appreciate clarification. The provision seems to mirror section 99 of the Taxes Management Act 1970. It would appear wrong that the same document—the incorrect return—should be capable of attracting penalties under both provisions. That could be seen in some quarters as a doubling of the statutory maximum penalty. I seek the Chief Secretary's clarification on that, and his confirmation that that will not be the case.

Paul Boateng: The clause applies section 99 of the Taxes Management Act 1970 to stamp duty land tax. It does not duplicate the 1970 Act, but it does apply the provision to stamp duty land tax. If people were to seek to evade two taxes, whether on one form or two, they would face two penalties, which seems perfectly reasonable. People seeking to evade two taxes could pay a maximum penalty of £6,000, which no one would object to.

John Baron: May I just be clear? The Chief Secretary's view is correct, but could one incorrect return attract penalties under both provisions? Could one offence be taken up by both provisions, which exactly mirror each other?

Paul Boateng: I do not think that there is such a risk, but if you were to evade two taxes you would face two penalties.

John McWilliam: The Chief Secretary is saying ''you''. I am not evading any taxes; I was very happy with my assessment this year.
 Question put and agreed to. 
 Clause 96 ordered to stand part of the Bill. 
 Clause 97 ordered to stand part of the Bill.

Clause 98 - Admissibility of evidence not affected by offer of settlement etc

Amendment made: No. 267, in clause 98, page 61, line 13, leave out ''freely and fully''.—[Mr. Boateng.] 
 Clause 98, as amended, ordered to stand part of the Bill. 
 Clause 99 ordered to stand part of the Bill. 
 Schedule 14 agreed to. 
 Clauses 100 to 103 ordered to stand part of the Bill.

Clause 104 - Partnerships

Question proposed, That the clause stand part of the Bill.

Mark Prisk: Clause 104 and schedule 15 are integral to the Bill. The Committee will know that I have tabled amendments Nos. 8 and 186, both of which address matters of importance to people outside the Committee. I regret the loss of those points, but I am aware that the Government-imposed knife is hanging over the debate. Because we have many important clauses to consider, it is with regret and reservation that I shall not move those amendments.

David Wilshire: I want to second my hon. Friend's point. I realise that one cannot blame the Government for two Divisions and an excursion into clause 94, but even if those things had not happened, we still would not have had enough time to do the business. We are, once again, prepared to co-operate to get on to important matters, but it is co-operation under protest.
 Question put and agreed to. 
 Clause 104 ordered to stand part of the Bill. 
 Schedule 15 agreed to. 
 Clause 105 ordered to stand part of the Bill. 
 Schedule 16 agreed to. 
 Clauses 106 to 115 ordered to stand part of the Bill. 
 Schedule 17 agreed to. 
 Clauses 116 to 121 ordered to stand part of the Bill.

Clause 122 - Index of defined expressions

Amendments made: No. 268, in 
clause 122, page 72, line 35, at end insert— 
 'acquisition relief 
 Schedule 7, paragraph 8(1)'
 No. 269, in 
clause 122, page 72, line 41, at end insert— 
 'charities relief 
 Schedule 8, paragraph 1(1)
closure notice 
 Schedule 10, paragraph 23(1) (in relation to a land transaction return); Schedule 11, paragraph 16(1) (in relation to a self-certificate)'
 No. 270, in 
clause 122, page 73, line 2, at end insert— 
 'completion (in Scotland) 
 section 121'
 No. 271, in 
clause 122, page 73, line 6, at end insert— 
 'discovery assessment 
 Schedule 10, paragraph 28(1)'
 No. 272, in 
clause 122, page 73, line 12, at end insert— 
 'implementation date 
 Schedule 19, paragraph 2(2)'
 No. 273, in 
clause 122, page 73, line 24, at end insert— 
 'notice of enquiry 
 Schedule 10, paragraph 12(1) (in relation to a land transaction return); Schedule 11, paragraph 7(1) (in relation to a self-certificate)'
 No. 274, in 
clause 122, page 73, line 30, at end insert— 
 'reconstruction relief 
 Schedule 7, paragraph 7(1)'
 No. 275, in 
clause 122, page 73, line 32, at end insert— 
 'Revenue determination 
 Schedule 10, paragraph 25(1)' 
 —[Mr. Boateng.]
 Clause 122, as amended, ordered to stand part of the Bill. 
 Clause 123 ordered to stand part of the Bill. 
 Schedule 18 agreed to.

Clause 125 - Abolition of stamp duty except on instruments relating to stock or marketable securities

Howard Flight: I beg to move amendment No. 63, in
clause 125, page 74, line 31, at end add 
 'or transactions excluded from stamp duty land tax by Part 3 of Schedule 15 to this Act'.

John McWilliam: With this it will be convenient to discuss the following:
 Amendment No. 64, in 
clause 125, page 74, line 34, at end add 
 'or which is the subject of a transaction excluded from stamp duty land tax by Part 3 of Schedule 15 to this Act'.
 Amendment No. 65, in 
clause 125, page 75, line 11, leave out from 'instruments' to end of line 13 and insert— 
 'if they are executed on or after the implementation date for the purpose of stamp duty land tax (see Schedule 19 to this Act).'.

Howard Flight: After the sterling work of my hon. Friend the Member for Hertford and Stortford on this ghastly new tax, I volunteered to finish off the section. The amendments are in part drafting and in part probing amendments. I shall first deal with amendments Nos. 63 and 64. The opening words of clause 125 indicate that henceforth stamp duty will apply only to stock or marketable securities, but that is not the case in schedule 15, which says that some transactions involving partnerships are not covered by the new stamp duty land tax and therefore remain subject to stamp duty. Considering the intent to draft
 legislation in a clear manner for readers, it seems that that should be put right. The probing part of the amendments is to ask the Chief Secretary whether we missed other transactions in schedule 15 that still fall under stamp duty and not under the new stamp duty land tax.
 Amendment No. 65 is also a probing and a drafting amendment. It is not entirely clear whether it is intended that the qualification of having been 
''executed on or after the implementation date for the purposes of stamp duty land tax''
 applies to subsections (5)(a) and (b) or, as worded, only to subsection (5)(b).

Paul Boateng: Amendments Nos. 63 and 64 are unnecessary, as the points have been covered in clause 125(7) and sub-paragraphs 2 and 3 of paragraph 13 of schedule 15. Those provisions have the effect of preserving the stamp duty charge on the partnership transactions that are listed in part 3 of schedule 15.
 Preserving the stamp duty charge on the transactions in part 3 is a temporary measure. The intention is to replace part 3 in the Finance Bill 2004 with a stamp duty land charge on those partnership transactions. There will be consultation on the new SDLT proposals, which will commence when the draft clauses are issued in the summer. It is important to recall that the measures that we propose are to be seen in that light. In the light of that explanation, I hope that the Opposition will not press the amendment to a vote. 
 Amendment No. 65 is of little practical effect. It appears to replace ''purposes'' in clause 125(5)(b) with the word ''purpose'' and omits the final bracket. It is doubtful whether the amendment would make any difference to the sense of the clause. Such a change would not be appropriate. The amendment does not seem to correct any obvious clerical error, and would introduce one because of the missing closing bracket. Although I understand that the hon. Gentleman seeks to probe these matters, I hope that my explanation that we shall return to them during consideration of the Finance Bill 2004 means that he will not press the amendment to a vote.

Howard Flight: It has been useful to get the Government to admit that they propose to extend the new tax to partnerships, which explains the drafting. Perhaps the Chief Secretary could read what I have said about amendment No. 65. It is still not clear whether the qualification of having been executed on or after the implementation date is meant to apply to just paragraph (b) or also to paragraph (a), but with that proviso I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 125 ordered to stand part of the Bill.

Schedule 20 - Stamp duty: restriction to instruments relating to stock or marketable securities

Howard Flight: I beg to move amendment No. 67, in
schedule 20, page 244, line 4, at end add— 
 'Clearance procedure 
 2A(1) The following provisions shall have effect where in pursuance of this Part of this Schedule a person furnishes to the Inland Revenue particulars of things done or to be done by him (either alone or together with others) to seek confirmation of a just and reasonable apportionment of any consideration, that is to say— 
 (a) if the Inland Revenue are of the opinion that the particulars, or any further information furnished in pursuance of this paragraph, are not sufficient for the purposes of this Part of this Schedule, they shall within 30 days of the receipt thereof notify to that person what further information they require for those purposes, and unless that further information is furnished to the Inland Revenue within 30 days from the notification, or such further time as the Inland Revenue may allow, they shall not be required to proceed further under this section; 
 (b) subject to subparagraph (1)(a) above, the Inland Revenue shall within 30 days of the receipt of the particulars, or, where that subparagraph has effect, of all further information required, notify that person whether or not they are satisfied that the apportionment proposed is just and reasonable; 
 and, subject to the following provisions of this paragraph, if the Inland Revenue notify him that they are so satisfied, the apportionment proposed shall be deemed to have been done on a just and reasonable basis. 
 (2) If the particulars, and any further information given under this paragraph with respect to any transaction or transactions, are not such as to make full and accurate disclosure of all facts and considerations relating thereto which are material to be known to the Inland Revenue, any clearance given by them under this paragraph shall be void. 
 (3) In no event shall the giving of a clearance under this paragraph with respect to any transaction or transactions prevent this paragraph applying to a person in respect of transactions which include that transaction or all or some of those transactions and also include another transaction or other transactions.'.
 Schedule 20 requires taxpayers to recognise a just and reasonable apportionment of consideration into non-stampable amounts when a transfer acquires stampable and non-stampable property. Where two persons acquire stampable property, the joint consideration has to be apportioned on a just and reasonable basis between them. Where the taxpayer gets it wrong, the transfers are stampable as if they are correct, but the correct answer is not clear. The schedule also amounts to legislative rewriting of private contracts. The amendment introduces a clearance procedure designed to give certainty to taxpayers as to where they stand.

Paul Boateng: The amendment seeks to introduce a formal clearance procedure for agreeing with the Inland Revenue the basis on which consideration is to be apportioned when an instrument or several instruments transfer property of which only parts relate to stock or marketable securities. As part of its normal service, the stamp office will review documents and discuss them on a formal basis, which is normally helpful. Provided that all the facts have been disclosed to the Inland Revenue, that practice gives the parties concerned certainty about the stamp duty payable.
 There is also a formal adjudication procedure, which enables the parties to a transaction to obtain a firm opinion as to the duty payable. That also provides a route for appeal should there be disagreement with the Inland Revenue. The clearance procedure proposed would increase complexity by creating a third measure for obtaining help from the stamp office. I cannot accept that the amendment would add to or improve the advice already available. The Inland Revenue seeks to be helpful and to discuss such matters. I do not think that the amendment is necessary, although it is no doubt well meaning.

Howard Flight: I am glad that the Chief Secretary has spoken into the record what amounts to a clearance procedure and acknowledged that it is necessary in such situations. I accept that the formal procedure is not needed, and I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Howard Flight: I beg to move amendment No. 66, in
schedule 20, page 244, leave out lines 27 to 36.
 In the final paragraph of schedule 20, the Treasury has taken further power to amend or repeal primary legislation on stamp duty and the new tax by regulations subject only to negative resolution. The power is too wide, and the Chief Secretary referred inaccurately to the changes because stamp duty is not being confined to stock market or marketable securities. Our amendment would uphold the rights of Parliament.

Paul Boateng: The amendment seeks to delete the power of the Treasury to make regulations to amend or repeal enactments relating to stamp duty and stamp duty reserve tax, consequent on the abolition of stamp duty, except on instruments relating to stock or marketable securities.
 There is a complex interaction between stamp duty and stamp duty reserve tax, and we need to ensure that the present effect of the legislation is preserved for stock and marketable securities. The ability to do that by Treasury regulations means we can ensure that repeals and amendments are put in place when they are needed and that the reduction in the scope of stamp duty is achieved smoothly. The facility to make regulations for that purpose is a sensible measure to have in place, and I urge the Committee to reject the amendment, which would be unhelpful in its effect.

Howard Flight: We remain concerned that the power is too wide, and I repeat that it is not accurate, as stamp is not being confined to stock and marketable securities. In principle, if the Government have not worked out what they want to do and to repeal, they should delay the process. We are uncomfortable with yet more power resting with the Treasury. However, in view of the time, I shall not press the amendment to a vote. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Schedule 20 agreed to.

Clause 126 - Circumstances in which group relief withdraw

Howard Flight: I beg to move amendment No. 68, in
clause 126, page 75, line 22, leave out subsection (2).

John McWilliam: With this it will be convenient to discuss amendment No. 75, in
clause 127, page 76, line 43, leave out subsection (2).

Howard Flight: The amendments would delete part of a provision that rats on what was agreed in last year's Finance Bill. There is relief for transferring land around within a corporate group, and sections 111 and 113 provide for that relief to be withdrawn if, within two years of a transfer, the receiving company is sold out of the group. The amendments relate to clauses 126 and 127 where the period is extended to three years, contrary to the assurances made last year. Three years is too long and presents a genuine barrier to commercial turnover of property. The provision is widely regarded by the industry as dishonouring the understanding that was reached last year. The amendments would delete the relevant part of the provision.

Paul Boateng: As part of the Government's commitment to tackling stamp duty avoidance, clauses 126 and 127 contain a number of changes to tighten the clawback of group and reconstruction relief that we introduced in last year's Finance Bill. We make no apology for that. One of the changes is to increase to three years the time within which clawback of the reliefs can be triggered. The amendments would remove that increased time limit.
 We have chosen to increase the time limit for the clawback provisions to three years. There is no reason to delay implementation of the changes until stamp duty land tax takes effect. This is a direct response to continued avoidance using special purpose vehicles to avoid the full rate of stamp duty on transfers of UK land. A three-year time limit offers further protection, and I commend the provision to the Committee. It is an important part of the Government's strategy to counter stamp duty avoidance.

Howard Flight: The points raised illustrate how not to govern, in that a lot of time and effort was expended last year on the negotiations on stamp duty and the three-year principle was established. The Government are unwise to come back and say, ''Hard luck, chums; we are tightening the time'', particularly in the context of all the other changes. We shall therefore vote against the change from two to three years.
 Question put, That the amendment be made:—
The Committee divided: Ayes 7, Noes 14.

Question accordingly negatived. 
 It being after Five o'clock, The Chairman proceeded, pursuant to the Sessional Order D [28 June 2001] and the Order of the Committee [this day], to put forthwith the Questions necessary to dispose of the business to be concluded at that time. 
 Question put, That clauses 126 to 129 stand part of the Bill:—
The Committee divided: Ayes 13, Noes 9.

Question accordingly agreed to. 
 Clauses 126 to 129 ordered to stand part of the Bill.

John McWilliam: May I thank all right hon. and hon. Members for their co-operation in making that motion much simpler than it might otherwise have been?

David Wilshire: On a point of order, Mr. McWilliam. May I ask about the starred amendment—Government new clause 6?

John McWilliam: That will be taken for voting at the point on the amendment paper where it occurs, and it will be unstarred by that stage, so it is not affected.
 Adjourned at five minutes past Five o'clock till Thursday 12 June at five minutes to Nine o'clock.